Financial Freedom 101: Now everyone can become 'Dhanwan', this step-by-step guide will teach you the secrets of becoming rich..

Financial freedom means that your money works for you, not you for it. This means that the income from investments should cover your expenses, so that life remains comfortable even after you leave your job. Given rising inflation, saving alone won't suffice—investment is essential. By 2025, millions of people will be moving towards freedom through SIPs and mutual funds. So, let's learn a step-by-step guide on how to achieve financial freedom.

What is Financial Freedom?

Financial freedom means having enough corpus (funds) so that even with annual withdrawals of around 4%, using the 4% rule, the money won't run out. For example, monthly expenses of ₹50,000, then ₹6 lakh annually. At 4%, a corpus of ₹1.5 crore is required. Therefore, in a Tier-1 city in India, aim for ₹3-5 crore.

Step-by-Step Guide: How to Achieve Freedom?

1. Set Goals
- What to do?: Set short-term (1-3 years: emergency fund) and long-term (10-20 years: retirement) goals.
- How to do?: Calculate the FIRE number from monthly expenses × 25 (4% rule). Example: 50,000 expenses × 12 × 25 = 1.5 crore.
- Benefit: Planning is easier if the target is clear.

2. Create a Budget
- What to do?: Follow the 50-30-20 rule—50% essential expenses (rent, groceries), 30% desires (food, entertainment), and 20% savings.

- How to do: Track your budget and reduce expenses, such as eating out.
- Benefit: Savings of around 20,000-30,000 per month are possible.

3. Build an Emergency Fund
- What to do?: Keep a fund for 6-12 months of expenses (3-6 lakh rupees) in liquid funds or savings.

- How?: Pay off debt first, then invest around 10,000 rupees a month.
- Benefit: Avoid having to borrow money in case of job loss or illness.

4. Pay off Debt
- What to do?: Pay off high-interest loans (credit cards 36%) first.
- How?: Set EMIs, always prioritize your budget.
- Benefit: Being debt-free will increase your savings.

5. Start Investing
- What to do?: Invest in mutual funds (12% return) through SIPs, choose PPF (7.1%) or NPS (8-12%).
- How?: A 20,000 SIP will generate around 1 crore rupees in 15 years (at 12%).
- Benefit: Compounding helps your money grow faster.

6. Increase Income
- What to do?: Learn skills (digital marketing), start a side business.
- How?: Earn an extra ₹10,000 through freelancing.
- Benefit: Reach your target faster with more savings.

7. Get Insurance
- What to do?: Life (₹1 crore cover) and health insurance.
- How?: Starting with ₹500-₹1,000 premiums.
- Benefit: Protection against unexpected expenses.

8. Review
- What to do?: Check your plan every year.
- How?: Talk to an advisor.
- Benefit: Correct any mistakes.
Calculating Freedom in India
- Expenses: ₹50,000 per month, then ₹1.5 crore corpus.
- Time: ₹1.4 crore in 20 years from a ₹20,000 SIP (12%).
- Tip: Assume 6% inflation, increase your target.

Precautions
- Understand the risks (mutual funds fluctuate).
- Always exercise patience.
- Always avoid fraudulent advice.

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